The story of how broker Attwood & Hart went under
The story surrounding the downfall of broker Attwood & Hart is reflective of the struggle businesses face as they battle to survive the recession. The company, which was formed in 1986 by Peter Attwood and Martin Hart, like many small firms struggled to get financial support from banks.
Since its formation it had traded strongly and built up a strong client base, particularly in its Aviation Employers Liability scheme. However, according to the administrator’s report, the business was dealt a massive blow when its private medical care scheme, Attwood and Hart Executive Trust Scheme, was hit by a number of claims for life threatening cancer cases and the scheme ran out of money in late 2007 and was closed. After using their personal funds to support the scheme, the directors, including Attwood and his wife Maggie, failed to receive financial support from banks and Peter Attwood then suffered a major heart attack, also forcing his wife to resign as a director. Their son, Christian, then took over the business and a deal to sell the financial services arm of the business to ease the pressure on the company’s accounts fell through.
The company was later successful in getting a loan but this was short lived as its bankers requested it be used to repay an outstanding debt. In September 2008, Christian Attwood suffered a nervous breakdown. However Peter and Maggie Attwood had returned to the business, and discovered that a “considerable amount of money” was owed to certain insurers, but most notably Brit Insurance.
It was thought that premium payments “over and above the commissions retainable by the company” were being used to support the company’s ongoing trade, resulting in premiums not being passed on to the insurer. Brit, who supported the broker’s Aviation Employers Liability Scheme worth £150,000 in income per year, declined the company’s offer to resolve the shortfall and refused to deal with the broker.
The directors made a last ditch attempt to find additional funding but were unsuccessful and was eventually issued with a winding up petition. The full extent of how much insurers and brokers that dealt with the business will be hit has yet to be realised. But the events that unfolded bring in to perspective the harsh realities a broker faces.
See story: Insurers caught out as broker Attwood fails